Mitigating disastrous consequences of the COVID-19 pandemic in Bangladesh: KfW provides support with emergency coronavirus aid

• EUR 20 million of wage replacement payments for workers in the textile industry affected by the impacts of coronavirus
• 215,000 workers to benefit directly
• Foundation for long-term social security in the textile sector

On behalf of the Federal Ministry for Economic Cooperation and Development (BMZ), KfW is providing the EU with EUR 20 million in wage replacement payments for employees in the Bangladeshi textile industry, who have been particularly affected by the consequences of the COVID-19 pandemic. As such, it is supporting an EU programme amounting to EUR 93 million designed to mitigate the drastic economic effects of the COVID-19 pandemic on employees in the textile sector, an important industry in the country. Workers particularly affected by the developments are being paid on a short-term basis to bridge the gap in lost wages. The German contribution alone will directly benefit 215,000 workers whose livelihoods are at risk, while a further 600,000 family members will benefit indirectly.

“We are participating in the EU’s support for Bangladesh in an effort to effectively tackle the spread of unemployment, poverty and hunger as a result of the COVID-19 pandemic. The mechanisms for issuing emergency relief payments to textile industry workers who have been laid off or retrenched may also lay the foundations for establishing a long-term social security system for the textile industry,” says Dr Günther Bräunig, CEO of KfW Group.

The textile industry is the backbone of the Bangladeshi economy. Textile products make up 86 per cent of Bangladesh’s exports and contribute a trade volume of around EUR 40 billion. Bangladesh is a member of the group of Least Developed Countries, which are the world’s poorest countries. If the textile industry was to suffer permanent damage, then the entire country would be at risk of further economic problems and increased poverty. The sector employs around 4 to 5 million people in Bangladesh, 60% of whom are women. Following the closure of a large number of textile factories, around 2.3 million workers have been laid off or retrenched since the start of the COVID-19 pandemic. While some of those affected are still without employment, others are now working again, albeit often at less favourable conditions.

More information on KfW Development Bank is available at: www.kfw-entwicklungsbank.de